Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson are urging Congress to act swiftly on a $700 billion bailout plan for the financial system.
Politico.com quotes a former Federal Reserve official as saying, “the alternative is complete financial Armageddon and a great depression.”
Hugo Duncan writes in the Evening Standard that if the bailout fails, “banking stocks are likely to drag shares around the world into the mire sparking further panic over the financial system and state of the economy. It would make recession in America and Britain ever more likely, with house prices and standards of living falling and repossessions and unemployment rising.”
Assuming that Congress approves the Bernanke-Paulson bailout plan, do you think it is enough to stabilize the banking sector?
The impact on Main Street from the crisis on Wall Street is another open question. “How long it will take the banks to restore health to their balance sheets, raise capital and start lending money again,” Bernard Baumohl, chief global economist at the Economic Outlook Group, tells Nick Carey. ”That could take a year and credit conditions may start to improve in the second half of 2009.”
For full coverage of the crisis in credit, click here.
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Here’s an idea,
America has a population of 303,824,640 give each and ever American 1 million dollars. And let those who caused this mess suffer. Hey even if the Government paid every Hard working American citizen a million, there is more then enough change to give the leftovers to Wall Street.
The people first.
- Posted by Elliot HenryNO BAILOUT! The overwhelming majority of taxpayers are saying no to this. We have a government of traitors and crooks! A bailout is not the solution, jail time for every member of congress and the administration is.
- Posted by Steve MThe true cost will be substantially less than the $700 billion as the mortgage backed securities still have value over the medium/longer term.
The financial system can be more closely regulated in future to avoid excessive lending / risk taking.
The cost to the economy of not proceeeding would be much higher.
- Posted by KeithThis bailout “gift” will no more stop the coming depression than the so called “stimulus package”. It will only postpone it a bit longer.
- Posted by william powellWhat kind of a school of economics did your writer attend?
Regardless of the outcome of the bailout these monster banks must be broken up. They grow ever more enormous before our eyes. One wonders if this fact alone explains what we are seeing. It is obviously a profound national security issue to have any corporation or industry so critical to our economic survival that its failure can bring down the republic. What ever happened to anti-trust?
Are our legislators so terrified of these companies that the congress will do anything to appease them? Will these giant corporations forever retain quick and easy access to the US treasury? Will they continue to dictate the form and the outcome of legislation and enjoy successful litigation to their own self-serving advantage at the expense of the working class?
Why is it impossible to get billions for education, health care and the needy middle class after years of legislative stonewalling, while Wall Street gets trillions in weeks with the only disagreement being over the details?
- Posted by robertThe problem that I see with this bailout is that the US Government itself is bankrupt, largely due to 50 years of massive, failing military adventures … the USA is now spending as much as ALL other countries in the world combined, on its military hardware and manpower, its CIA and other “secret” organizations spying on Americans and everyone else, its “Homeland Security” department constantly looking for new ways to take away freedoms, its veterans affairs dept, underfunded but still huge.
This bailout will instantly add $5,000 to the debt of each taxpaying American citizen. Its been clear for a long time that the US government has no intention of ever paying off its debts. Why anyone would trust them with new money is beyond me.
It is high time that the US government declare bankruptcy and put itself at the mercy of its creditors.
- Posted by john tuckerThe longer they wait, the worse it will be for them.
$700 billion now to save the banks and the overpaid and over rewarded brokers and when that fails to do the job, what then?
- Posted by RobinAnother $700 billion please?
And if that fails?
Let the house of cards fall down now and start over.
Why are you and I paying to rescue the very people who put us in this mess in the first place?
It depends how the bailout is structured. The devil is in the details. I think is blatantly wrong to use the word “Bailout” in cases such as Bear&Stearn, AIG, etc. it gives people the wrong perception as if it was government money. When Chrysler was helped we got every penny back plus interest. JP Morgan aid never belonged to the taxpayer, neither did AIG aid. All the money used belongs to the banks. The FED is a private corporation “The “Federal Reserve Bank of New York” “NOT of the USA”. How it uses its money is none the taxpayers business, because all the money is funded by the banks. Yes, the 700 billion is coming from the taxpayer (not the FED) If you care to disallow interbank loans, commercial funds to freeze, and corporations to fail like dominos, foreign funds to stop flowing into the US, well than go ahead and deny the aid. See you in the unemployment line. Either way the dollar value will be hurt, so will your buying power. And since the taxpayer was so against helping AIG it won’t see a penny of the 9.775 Billion in interest income going to the FED.
- Posted by ddavidI dont know why majority of analysts think bailout is bad.I firmly believe that it is good for over all USA and the world.
Analysts are saying “why to bail out big companies with tax payer money ”
I also have some reservation about this but I think bail out is not only about big investment companies.Normal people also have put there money in stock market and in housing .If housing and stock market starts to improve it will also improve common people
life.Taxpayers cannot remain unaffected if the housing and stock market deteriorate.
And its not about housing and stock only .If you can see big picture ,everything is interrelated like employment etc.
I think few peoples who loves gold very much are shouting too much because they are afraid if stock market and housing start improving money will flow from gold to this markets.They are just cursing the world economy to go to hell fast .They are making people believe that we are at the end of the world and gold can only save us .I think we have experienced many known and unknown turbulence’s but still we stand.And to remind with so much speculation gold is not safe heaven anymore
- Posted by wisdom.saysWhile we profess to be the freedom nation of the world,
we do not exercise it at home.
If proof positive exists that the rick rule off the back of the average, this bailout must be it!
Nothing has succeeded in the Republican rein on power…and yet we are still lumbered with a lame duck when foreign Prime-ministers who forced their country into the coalition are gone.
The possibility of another lame duck 71 year-old running a country is imminent.
Professing an iron fist with a country depleted of money, credibility and self-respect.
Both parties will learn to respect the people if the Republicans pay dearly in the polls for their greed and blind disrespect to the people.
This will happen again if the voter lets them get away with it!
- Posted by Raymond